Private vs. For-Hire…But What About Dedicated?

Private fleets may be “sitting pretty” right now, according to a recent article, but what if the economy changes?

Back in April, an article in truckinginfo.com, “Vieth: Private Fleets Sitting Pretty,” profiled the speech given by economist, Kenny Vieth, at the National Private Truck Council’s annual meeting. In this speech, Vieth talked about positive signs in the economy overall, including rising consumer and business confidence, improved corporate cash flow and profitability, and more. Add to that, the lower fuel costs, and this is good economic news for those responsible for hauling freight. Vieth stressed that the advantages that private fleets have over for-hire fleets is that the latter’s “equipment and driver capacity is more limited, as they are more impacted by the driver shortage than private fleets.” To reinforce this, he talked about the lower driver wages and higher recruiting costs for for-hire fleets. He does warn, however, that private fleets shouldn’t rest on their laurels; that “For-hire will keep getting dragged kicking and screaming into the technology world [by regulations and market demand].”

While reading this, I thought to myself, “What about dedicated fleets?” That option wasn’t mentioned in the article, yet that is a growing segment of the transportation market. A 2013 article in Logistics Management pointed out that, at that time, dedicated was accounting for $40 billion of the $280 billion truckload market, and that was only expected to grow. The reasons for this should be obvious, as I stated in a blog last year:

Truck capacity is continuing to tighten due to added freight volume, and simply expanding an existing private fleet is prohibitively expensive due to the need to comply with new regulations and master new technologies.

This tightening capacity is, essentially, putting carriers in the driver’s seat when it comes to price and scheduling negotiations. By using a dedicated carriage provider as either a replacement for, or add-on to, an existing private fleet, shippers can lock in a rate for a contracted period of time and have the capacity necessary to deliver their goods

Although private fleets have a better retention record than for-hire fleets when it comes to drivers, recruitment and training is a big expense when your freight needs go up and you need new drivers. By dealing with a dedicated carriage provider, that worry is no longer yours; you can count on the provider making sure that drivers are there when you need them.

There are other benefits to working with a dedicated carriage provider:

With a dedicated carriage service, shippers no longer need to be concerned with the non-core but still essential tasks of fleet administration, regulatory compliance, fleet maintenance or driver recruitment or retention. The service provider takes on all of those responsibilities.

A quality dedicated carriage program uses all of today’s transportation technology to create a complete view of the supply chain for the shipper. All trucks and drivers are equipped with devices that alert personnel at each stop of real-time delivery schedules and delays.

Many dedicated carriage providers offer logistics engineering services that can help create the most cost-effective, technologically sophisticated solutions for shippers, including route optimization and transportation planning. These tools improve customer service, improve utilization of assets and can save shippers thousands of dollars.

We can only hope that business continues to flourish and shipments continue to flow. But what if that should change? What if you need to scale down? If you’ve expanded your private fleet and business slows down, you’re left with expensive equipment that’s sitting dormant along with the employees needed to drive those vehicles. That concern is eliminated when you work with a dedicated carriage provider, since they are the ones responsible for supplying both the vehicle and driver as needed. So yes, private fleets may be sitting pretty, but they should be looking to dedicated carriage as an increasingly viable option or supplement.

To find out if dedicated contract carriage is right for your fleet, contact us.

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About Joe Gallick

Joe Gallick is Senior Vice President of Sales for NationaLease. An experienced supply chain executive and spokesperson in the logistics provider industry, he held senior management positions with Penske Logistics before joining NationaLease. He serves as a liaison with the Penn State University Center for Supply Chain Research.